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Paul Krugman talked about this back in 2009. He said that the historical narrative would be that the stimulus worked to prevent a depression, but that it was far too small (less than half the size it should have been) and allowed for a weak but steady recovery. I do believe he also said something about how that stimulus was comprised of too many tax cuts and not enough long-term infrastructure investments.

Well yeah, improving the economy during Obama's term would hurt their chance of getting "their guys" into positions of power. And everyone knows that politics is all about gaining power to benefit yourself and your friends. What, you think politics is about improving the country and running it in a healthy manner? What are you, some kind of socialist?!?

The thing is, there are $10s of billions (possible $100s of billions) in approved government spending programs, including from the stimulus, that has not been spent.

The money was approved, borrowed, allocated and now sits, on the books, but isn't being spent. There are some legitimate reasons for this: for some programs, not all the budgeted money was needed. Or it wasn't spent within the time-limit of the project. Or the projects are awaiting regulatory approval.

So how did this money stimulate anything? How can they claim not enough money was in the stimulus if it wasn't all used?

Here's an idea (it's not original, I'm sure many others have had it): There are many federal and state laws that apply to businesses. But there are exceptions to those laws for small businesses (those with 10 (or some #) employees or less). How about a temporary (2 year?) lifting of the exception to 20 employees or less.

Small businesses employ more people (combined) than big corporations. There are many small businesses with a handful of employees that would hire a few more, but know that if they go over the "magic number" (10 or whatever) that they will be subject to a large array of Federal and State regulations that cost too much to justify the extra employees.

Imagine if even half of every small business with 10 employees could decided to hire 2 more people because they could do so without drastically changing how they do business. What effect would that have on unemployment?

This should be a classic example of the complete folly of trying to appease the GOP. The tax cuts were less effective than the spending for boosting employment. But Obama didn't get any credit from the GOP for including this less effective stimulus. The GOP narrative is that the stimulus didn't include any tax cuts and it was all spending and that is what the average person with short term memory thinks.

A lot of adminstrations show off the stimulus too. His chose to put it into our paychecks through tax cuts rather than receiving a check like the Bush adminstration did. People tend to save when they get a large check or pay down bills. When it's hidden in your paycheck you tend to spend more. The Obama adminstration did the smart policy even though it wasn't as smart politically. Check out 'The New New Deal' and 'Money Well Spent?' They explain the effects of the stimulus well.

Even in my hometown it's helped. We have a remodeled Federal building downtown, hybrid city buses, and improved transportation for the disabled. All thanks to the stimulus of the Obama administration.

He claims that the economy has a capability to produce $X trillions more, so the government should spend $X trillion in stimulus.

That kind of reasoning is wrong because the US has a huge trade deficit right now. Increasing buying power among consumers would only increase that deficit, not improve the economy.

Ironically, it seems Krugman doesn't read the paper he writes for. There was an article in the NYT a few years ago on why the iPhone isn't manufactured in the USA. It was a long article, several pages. Among the data they presented, I remember they mentioned the display glass.

When Apple decided that plastic scratched too easily, they went to an American company that had developed a high-strength glass that would be perfect for a phone. So this American company built a factory in China to make that glass. Why? Because the whole infrastructure for making phones is in China. It wouldn't make sense to make the displays in the USA just to send them to China.

To bring manufacturing back to the USA would take a huge investment. Raising the buying power of American consumers isn't enough, the cost difference would still exist. Stimulus spending stimulates more the Chinese economy than the American.

You assumed that Krugman only proposed increasing the buying power of consumers. Aren't investments in infrastructure a bit different from that? Wouldn't those be investments in our productivity which would help us to achieve the capability he claims?

Forgive me if I defer to the Nobel Prize winning economist in matters of the economy, rather than listening to someone who attempted to copy hyperbole and a half in their username but ran out of characters and kept it anyway.

You mean you are going to defer to F.A. Hayak, that classy gentleman who also won a Nobel Prize in economics? I am pretty sure Hayak would have called bullshit on a lot of what Krugman says a long time ago....

The point being: Just because someone gets a Nobel Prize doesn't mean they are right.

Take Obama and his Peace Prize as another example: According to that, bombing barbeques and killing innocent people while fleecing the American people to pay for it is "Peaceful". Forgive me if I disagree with that sentiment.

This is the most amazing character assassination I have ever seen. It's... beautiful. :')

But also irrelevant. Krugman is not the God of the Economy. He does not possess an All-Seeing Eye. He, as well as many others, can only guess and prod at the causes and effects of the economic collapse, the only difference is that he does better than most.

How does that NYT article relate to Krugman? If anything, it seems to support his point that the situmulus should have been larger and directed more towards infrastructure creation rather than tax cuts.

Hindsight is 20/20, but I'm not convinced we have enough data yet to claim that "the stimulus worked". Many economists contend that WWII brought us out of the great depression, not massive government programs. It simply hasn't been long enough to measure the long term impacts, nor do we know yet if we were better off without ARRA.

"Worked" is quite a relative term and doesn't necessarily indicate efficiency. Perhaps the $1T could've been spent better elsewhere (opportunity cost) or was more damaging than good?

What about the national debt? Our promises are far outpacing tax collections.

CBO develops estimates of ARRA’s effects on output and employment by looking at recorded spending to date along with estimates of the other effects of ARRA on spending and revenues, by using evidence about the effects of previous similar policies, and by drawing on various mathematical models that represent the workings of the economy. Using such analysis, CBO estimates that ARRA’s policies had the following effects in the fourth quarter of calendar year 2011 compared with what would have occurred otherwise:

They lowered the unemployment rate by between 0.2 percentage points and 1.1 percentage points,

They increased the number of people employed by between 0.3 million and 2.0 million, and

They increased the number of full-time-equivalent (FTE) jobs by 0.4 million to 2.6 million. (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers.)

The thing is that the models used for this analysis are not foolproof, creating a lot of disagreement among economists.

This question is exceedingly difficult to accurately quantify because of how it's set up. Essentially, the argument is that, though unemployment is high, it would have been higher without the stimulus. It's impossible to directly prove that statement since there's no experimental control. Ideally, we'd just substitute in a pre-established model. However, for macroeconomic projections like this, our models have terrible predictive abilities. Like, the unemployment rate we have now is worse than the "this is what would happen without the stimulus" projections the CBO made in 2009. Source - see page 5

It could be right. It could be wrong. You can find respected economists arguing both.

Looking at the effects of the stimulus requires you to consider a counter-factual - what would have happened if there had been no stimulus?

Since we cannot run experiments, economists use mathematical models to try to predict what would have happened. Those models implicitly assume that the stimulus will work. Specifically, they make assumptions about the state of the economy and the way certain things work. This is what the CBO does.

I wouldn't discount the results of the model completely. But the evidence for whether the stimulus worked is far less certain then either 'side' seems to recognize. The fact of the matter is that we don't really know.

Imagine if I said to you, "This rock is a tiger-repellent. See? No tigers around here." You might say "I don't think there would be tigers even if you didn't have a rock." The CBO is, in essence, assuming that the rock is a tiger-repellent and then using that assumption to quantify how many tigers have been repelled. Again, there's more behind it than that, but we still need to be much less certain about the effects of the stimulus than we are.

But that's true of any economic analysis. Sicne we can't actually model economics, because we can't repeat the same test under the exact same scenario, every economic understanding falls under your same criticism.

So, yes, we can't know if it did any good, we can't know if it did worse. We can only make estimates based on where we are and filter that based on those mathematical models.

So, rather than saying it can't know if the stimulus did anything, we have to talk about it within the context of economics, in which the best understanding says it does. Or, we say that it's no use in analyzing economics at all and throw our money to the wind.

Yes, you're completely correct, and as someone who makes a living with economic models I don't think we should throw anything to the winds. Just acknowledge that while we may believe the stimulus worked, we believe it with p = 52% instead of p = 95%. There is a great deal of uncertainty.

Just acknowledge that while we may believe the stimulus worked, we believe it with p = 52% instead of p = 95%. There is a great deal of uncertainty.

And this is where you completely lost me. I was rolling my eyes at your "how can we really know anything?" bs, but I was giving you the benefit of the doubt. But trying to use statistically precise language to make a disingenuous claim about certainty takes the cake.

There's no legitimate doubt that the stimulus shored up demand, employment and the economy and began the climb out of the hole that W. dug for us. Rather than argue economic modelling or forecasts, I'll just let a picture tell 1000 words: http://www.politicsplus.org/blog/wp-content/uploads/2011/08/BikiniGraph.jpg I think it's pretty easy to reject H0 here. The only reason there's any debate at all about the effectiveness of the stimulus is because Republicans are lying about it. If you look at the facts, there's really no good faith argument to be made against it.

Thanks for the excellent figure. As a former Republican, who felt betrayed by the party because of its ever-increasing reliance on faith and rhetoric and refusal to acknowledge data, I am continually surprised by the number of people who cling to a disproven ideology. Even in theory, both communism and trickle down economics don't really make sense.

Despite having run the experiment with these policies and seen their failure, some people keep thinking "well, it will work this time." Einstein said it best: "Insanity: doing the same thing over and over again and expecting different results."

You give them more credit than I do. I don't think for a minute that many of them believe(d) the snake oil they were peddling. It was all just an excuse to cut taxes for the 1%. They've been laughing at gullible voters for 30 years.

I'm sure you've seen this satire of trickle down economics - imgur before. It's funny on the surface, but I really want to believe that it was not an ultra-wealthy plot, but a misguided attempt. However, the rationalist in me believes otherwise.

Well let me clarify that I did not mean those numbers literally! I just made them up to illustrate my point.

I don't question whether we can know things. There's quite a bit we can know, using rigorous statistical methods and economic theory. For example, pretty much all economists across the political spectrum agree that a gold standard would be bad, free trade is good, that we should eliminate corporate income taxes, and that rent control is bad.

However, there's also a lot we don't know so well. For example, whether minimum wages reduce employment, the extent of discrimination in the labor market, and whether the stimulus worked. That's all I'm saying.

With regard to your chart, what one would expect in the absence of government action is a recovery. The question would be, is the recovery faster with stimulus? So the null hypothesis would be something like 'recovery under the stimulus was as fast as recovery with no stimulus'. Well, in order to answer that fully you'd want to observe recovery with no stimulus and the same conditions. In a laboratory setting you'd do a controlled experiment. In an economic setting you'd try to look for many examples of recessions with a variety of responses and compare them. Sadly, there aren't a lot of recessions to do this with.

I assumed reading your previous comments that you were either conservative or just don't like Obama. I don't have to assume after reading this one.

"what one would expect in the absence of government action is recovery."

What evidence do you have of this? Just before the stimulus was signed economic forecasts were being continually updated to reflect that the recession was growing worse not getting better. This led to the snafu where an Obama aid claimed the stimulus would stop unemployment from reaching 8%, in the exact month in which 8% was hit.

You can bury your head in the sand and claim coincidence if you like. The economy started recovering just as the stimulus money started flowing and faltered as the money started drying up.

Look at the European countries who tried austerity? Besides Germany, they are all doing much worse.

Which is why its not an actual science. Science requires repeatable testing under the same conditions. That is why there are so many competing schools of thought in economics. That is why you should never take anything you read about it at face value. You will never know the true opportunity costs of spend 1 trillion dollars, on many questionable things. That money may have been used in an infinite number of other ways. Some would certainly have been better. At the end of the day though, you can look back at history to see similar circumstances and their effects. During the great depression we did similar programs, and some would argue prolonged the depression even longer. Is it true? That will be argued forever, because of the lack of real scientific data to go with it.

Well, my position is that the reason we prolonged the depression, was because New Deal programs were not given enough time to show promise, before Congress decided it was time to hit the brakes on 'out of control' spending (sound familiar)?

In fact, it wasn't until the massive government defense spending programs of WWII that we pulled ourselves out of it.

So, to me, that kinda proves that government spending can and does help an ailing economy.

The equation for our economy is actually pretty simple: 70+30=100.

70% of our economy is consumer spending, and 30% is government. Contrary to popular belief, 'government spending' does not equate to lighting cigars with $100 bills... it goes into our economy just like any other type of spending.

So, in a recession, like we have now, the equation looks more like: 40+30=70. 30% of our economy is 'missing' on the consumer side. So, the government can increase spending in the short-term (40+35=75) and they hope that the increased spending will spur the economy through indirect expenditures and the multiplier effect. At least long enough so that the downturn isn't nearly as bad as it could be, before the economy naturally recovers. This is the stimulus.

But, there are now those in Congress, most with Rs by their names, who want that equation to look more like: 40+25=65.

That doesn't look like it'll help to me. Does it look like it to you? In fact it appears that they're purposely trying to sabotage the economy. Like something you'd do if you only wanted Obama to be a one-term President.

Just to provide some more sources for those interested in diving deeper into this. One of the most interesting ways to get at the counter-factual problem is to look at differences in how much money each state got and correlate this with local growth indicators. Basically, each state gets different amounts of stimulus money (based on external factors like how many highways it has) and that that means we can have counter factuals like"New York State had a large stimulus (per capita) while Rhode Island got almost nothing. What were the differences in recovery rates?"

Yes, this is a great idea. But some of the papers just didn't pass the sniff test. For example, as I recall one found negative effects of the stimulus on growth! Thanks for the memo I will try to familiarize myself with the rest of the literature. These sort of natural experiments are always the most exciting and convincing empirical work I think.

Well there is actually economic theory suggesting that the stimulus COULD have negative affected growth negatively. This is pretty straight forward supply side theory. It says that government investment/spending in an area will crowd out private investment and may be inefficient. Thus the spending will limit what private companies can invest in or it will go to the wrong things. Both of these scenarios would affect growth negatively.

The supply side theory is much more plausible when the economy is booming and there is enough demand to go around. Its unlikely that in a recession, companies will be crowded out of the market. Also, short term spending, ANY short term spending, is likely to help someone.

As to why the measured effects would be negative, it is most likely due to omitted variables or endogeneity between who gets stimulus money and economic growth. For example, if a hurricane hits the south, hurting their economy, and these states also happen to receive disproportionate amounts of stimulus, it will look like the stimulus hurt unless you control fro the affect of the hurricane. To my second point, if stimulus money is given out based on poor economic performance, states that get more stimulus will naturally seem like they have worse growth.

Those numbers are terrible considering the amount of money that was spent, though. $700 billion is about 5% of GDP at the the time of the stimulus. The CBO's highest estimates for the growth supported by the stimulus barely touch that for the whole 3 year recovery. That would suggest that there was widespread waste and virtually no multiplier effect.

However, if you look at the household debt figures, you see that the american consumers paid of about 700 billion dollars in debt in 2010-11. This would suggest that the stimulus did not boost aggregate demand because people were paying off purchases they had already made. Therefore, the banks and creditors ended up with the money and the stimulus simply added to the liquidity trap.

Talking against it. He seems to be criticizing The New York Times editorial because it's not an academic work published in a peer-reviewed journal article. I admit, that is a form of reasoning, though it's defective in a number of ways. But aside from attacking the source (the Times), Jimcrator doesn't criticize the Times editorial on its merits. No evidence or reasoning is presented to rebut the actual economic arguments that the editorial is making.

That's what kills me about this discussion. Mainstream economists probably do rely too much on econometric modeling, giving a false sense of precision to some fairly complicated sets of relationships. But then you have this other camp that, among its more extreme members, asks us to reject econometric models entirely and rely instead on ... what, exactly? Great sounding rhetoric? Speeches that feed our confirmation bias?

At least with econometric models you can challenge assumptions, identify logical flaws or analyze a different data set and, in so doing, falsify the particular study's conclusions.

No they didn't say it was positive, they say it created jobs, which all gov't spending does. eg. I spend tax dollars on military, and more people are employed by the military. That doesn't mean economically efficient employment, nor does it mean an absence of long-term problems.

Also if you want evidence it is bullshit, don't ignore all the economists who say stimulus is bad.

Agreed, I'd hope billions of dollars in spending would help a little. The economy needed money and the government began providing it. The concern is the long term negatives here, and what made me most upset was the spending on short term low impact projects. I can tell you how many roads by me were worked on for no reason with that lovely sign next to it saying it was paid for by the stimulus.

Those signs infuriate me. The infrastructure in the country is going to shit, but instead of spending larger amounts of money where it would make an impact they divided it up into repaving fucking pot holes. On one level, yes it got jobs started faster. But it's hard for me to accept fluffy patch jobs when a serious issue is basically being ignored. Because now it can be said "but we spent tons of money on infrastructure", when in reality very little of that money went to fixing what was actually broken.

You're right that gov't spending increasing employment (and usually to no real economic benefit), but not in regards to military hiring, because military employment is (usually )not calculated in american labor economics:

I want to second this point. Economics is no more of a science than sociology, political science, or psychology before the rise of neuroscience. Just because economics is inherently quantitative doesn't mean that economic models and conclusions are more accurate than qualitative accounts from history or anthropology.

Economics is a lot closer to moral philosophy than it is to chemistry or biology. Numbers =/= truth.

Damn, did I stumble into bizarro r/politics? Everything looks normal at first, it's a wang-banger post magically at the top of the page after just a few minutes, it's a "Dems good, GOP is evil and lies" editorial, but THIS is the top-voted comment after one whole hour, not "fundies watching faux news will never get this" or similar?

Last I checked, editorials is exactly where r/politics gets its economic knowledge. In fact most of it seems to come from crazed alternet & rawstory blogs and selfposts that make Krugman's and Tabibi's editorials look like hardcore science.

Anecdotal evidence is pretty useless, especially when looking at something as large as the USA. The economic data tells a different story than you are, even if you don't think it's due to the stimulus.

This is anecdotal information--interesting, and applicable, and we should hear more details--that can't speak for the rest of the country. As it stands now, readers will either be swayed by such a generalization and do nothing, or notice your unfair jump to conclusions and disregard your story entirely.

This opinion piece is the definition of one-sided reasoning. Yes, the stimulus created jobs. If you give people money, they will be better off.

The article completely ignores however the cost of the stimulus. Money isn't free. When it comes to government spending there are three options for spending money on so-called stimulus:

You use surplus money that you are sitting on. This is not applicable in the case of the US since we owe a shit-ton of money and are flat out broke.

You borrow money. This is not free. We need to pay this back with interest. So the younger generation will have a very large bill to pay. This is a real bill. YOU have to contribute to this with higher real taxes in the future.

You print money. This is Bernanke's modus operandi. In this scenario the government has their hands in each and every one of our pockets. It's actually not very complicated: printing money reduces the value of every dollar you have. So if you are a saver, or get paid a salary in US$, or make purchases in US$, you are worse off everytime the gov't decides to run the presses.

Option 3 is the route taken by every failed nation. It's simple really since it is tantamount to hidden theft. The impact of rising prices and diminished purchasing power is gradual so there is little chance of revolt. The government can continue to play the role of Santa Claus and write checks for "stimulus" spending or bank "bailouts" without ever actually having to collect money from individuals.

This NYTimes article (and all be Paul Krugman) completely overlook the cost side of the equation. Nothing is free in life. The cost of this stimulus can be felt at the grocery store and gas pump - it's just one step removed so it is easy to overlook the connection.

actually, since borrowing costs and inflation are remarkably low at this point (and have been for quite a while). This makes borrowing for stimulus rather cheap.

Moreover, there is not some day on which our debts will all magically come due. A small proportion of our debts come due every so often (I think every few weeks or so), and we have paid them off, every time, without fail.

Also, the whole 'just printing money' explanation you offered is a gross oversimplification.

They just say, "Hey, it employed people for a while and made the stock market climb!" No shit? This isn't 'fixing' anything. These are one time jumps that are only being caused by large injections of liquidity. Eventually this is going to end, we can't have infinite quantitive easing unless we want infinite inflation. Eventually there will be deflation, home prices are going to fall, Stock market is going to fall, and businesses will shrink. There's no stopping it, only delaying it.

I've read in a Dutch article that America is finally gaining jobs and losing unemployment. But, why was the credit rating cut down by Egan-Jones from AA to AA-?
They give as argument that the value of the dollar is reducing because of depressing interest rates, but shouldn't be the fact that gaining jobs and losing unemployment increase the value of the dollar?

America is not creating enough jobs to keep up with the job losses. Unemployment rate only went down because people have stopped looking for work. And the jobs that are created are not sufficient enough to make people want to start buying, they are mediocre paying jobs. While the people with jobs are being tasked to do more with no increment in pay.

Because the credit rating has little to do with the financial solvency of the nation and everything to do with their apparent willingness to pay creditors. It was lowered because of the big face-off in Congress about defaulting on the debt. No one is seriously worried that the USA can't pay its debts; some are worried that it will refuse to pay them in the near future.

Do you remember that part where the international financial system almost collapsed over night, where 700,000 jobs were being lost every month, and it officially became the worst financial crisis since the great depression?

You mean the $278,000 they spent to create each $15,000/year job(most of which were not even real, and just lies about jobs 'saved'), but lets give them the benefit of the doubt and count all their fake jobs...that was what we define as a success?

Hmm.. I think the bar is set a little low.

The government could simply have cut a $100,000 check to everyone whose employment was allegedly made possible by the “stimulus,” and taxpayers would have come out $427 billion ahead.

Another thing that impressed me was the stimulus web site that was a map you could see pins that provided details on who got grants and what they were doing with it. Talk about being see-through? when have you ever seen government go to great lengths to give so many details on where the money was being spent and how?
In my town there was MAJOR infrastructure upgrades and the difference is amazing. Our downtown was a ghost town 5-10 years ago and now it's fucking rocking!

I propose we cut from our defense budget to get more money. Our 2012 Defense budget accounted for $687 billion. Obviously number one in the world in defense spending. Number two in the world, China, spent $107 billion on defense. In fact, the USA spends more on defense yearly than countries 2-21 COMBINED (and all those countries are our allies)! So I don't think we don't have the money. We just have to allocate our budget much more effectively.

The stimulus is the reason, in fact, that most Americans are better off than they were four years ago, when the economy was in serious danger of shutting down.

Maybe I'm missing something, but I don't see much evidence that most Americans are better off than they were 4 years ago. Every definition of unemployment (U1-U6) the unemployment rate is higher than it was 4 years. Poverty rates remain historically high(and aren't declining) and median income declined 1.5% last year. If the stimulus really worked well we should be seeing some progress in reversing the declines in income and some progress on bring poverty back to pre-recession levels. I'm not saying that the stimulus didn't do anything, but it doesn't look like a resounding success looking at the numbers.

In Obama's defense there are fewer people without health insurance, but with insurance exchanges still over a year away any promise of significant dent in the uninsured is still years away.

I think my life is personally a bit better than 4 years ago, but I'm not seeing enough positive news to be convinced of the claim that most Americans lives are better than they were 4 years ago.

Is this all Obama's fault as some Republicans would like to blame? Not really. Much of the decline in 2009 was due to a business bust that was already in progress when he came into office. That being said not all of the recovery Obama can take credit for either. e.g. Bankruptcy court really saved GM, not the bailout.

If I am underwater on my mortgage and cant feed my kids im in a depression. If I got a bunch of credit cards bought all the stuff I need. Then took out cash advances to pay my mortgage. I would be "feeling" pretty good; fed my kids, keeped my house, got a new car.

The question of "Worked" is subjective to what the goal was. If it was for the economy to "Feel" good then yes it worked. Did it increase productivity? no gdp is down. Did it "teach a man to fish"? not by a long shot.

Look, I'm not sure what it's called or what worked. All I know is that I found a good job last year (exactly 1 year in two weeks) and I'm making 110k. If I didn't get that job, I had other offers on the table +/- 5k in that range.

If I lost my employment today, I could secure another one in a week or two.

I do know that my wife is still looking in highly competitive field so...

Either way, I have a house, food, clothing and disposable income with no discernible pinch from the economics that surround me, wheras the hoopla of doom and gloom that preceded this year would lead me to believe I should be in the soup line and waiting for government cheese and paying $5 for gas.

All I know is something is working. People around me have jobs and are buying homes and spending money.

Stimulus or not, it's not as shitty of an economy as it was projected to be or is still purported to be.

If the stimulus worked, why are we still easing? In fact, why did we just announce the first-ever easing that has no prescribed time limit? Because the fed, that is the government, has not seen unemployment drop significantly enough. For the first time ever, the Fed has announced that easing will stop when the recession (in terms of unemployment) stops. It's results-based, which i think is a better policy than what they've done before, which had no criteria by which to assess "success" or "failure."

But what it also means is that the previous stimuli have not worked, at least not enough, and there's no immediate end in sight.

But what it also means is that the previous stimuli have not worked, at least not enough

"Not worked" and "not enough" are almost diametrically opposed concepts, though. If the stimulus didn't work, that means it was just a gigantic waste of money. If the stimulus worked but not enough, that means it not only wasn't a waste, but should have been bigger.

You are leaving out the cost-benefit analysis. You are trying to say "Yes" or "No".

The cost benefit analysis would likely show that the Stimulus hasn't done enough for how much it costs. There is no question that 1 trillion dollars being thrown against a wall of jobs... Something will stick. But the real question is, would we have been better off giving everyone without a job $33,333 dollars or the Stimulus package...

Does the phrase "worst recession since The Great Depression" mean anything to you?

Have you ever spent some time talking to someone who lived through the Great Depression? I know old people who still save yarn in case they need it. I think people like you are unconvinced of how bad things could have gotten, which is fine - we don't have a crystal ball that can show us what the world could have been like without the stimulus. But attacking the President for a stimulus that "didn't work" strikes me as ridiculous.

If the pilot announces, "I'm sorry folks, but we have to divert our flight and land now, because our engines 1 and 3 both went off line," and then we safely land and no one dies, it's really, really easy to bitch at the pilot about how you're not going to make it to your final destination on time.

It's more of a publicly enforced privately run monstrosity. Basically it's appointed by government, but then does whatever the hell it wants. They always mention that congress is supposed to oversee the beast, but in reality there is only a bare minimum of oversight which is more for show than any actual substance.

Whatever the actual construct is, I don't think you can credibly claim that the U.S. doesn't own its own monetary infrastructure. It's generally a good idea to separate day-to-day monetary policy from the government, so I guess that's where the confusion comes from.

The US government does not have control over the value of the dollar, if that's what you're implying. That's part of the Fed's dual mandate under "price stability." You can't have stable prices without a stable dollar.

Your logic is somewhat like something Mo Rocca said in one of his standup acts ten years or so ago, in reference to that Man vs. Beast show: "If a man can eat more hot dogs than a grizzly bear, then why do we need grizzly bears?"

If the stimulus worked, why am I not a billionaire? If evolution is true, why do we still have monkeys? That's how stupid you sound.

edit: just to be clear, i don't think you ARE stupid. I just think you SOUND stupid.

Did we ever have 20+% unemployment? Do you think that would have been impossible? Because the global industrial output, trade, and equity dropped in 2008 just as much (even a little bit more) than it did in 1929 when the crash that caused the Great Depression happened.

The policies we enacted prevented another great depression. Lots of conservatives now want to pretend like 2008 was just some little bump in the road that the Obama administration inexplicably has had trouble dealing with. It wasn't some little bump, it was a catastrophe and we WERE on the edge.

Exactly. The Fed keeps easing because otherwise, interest rates would skyrocket and kill private investment. Trying to stop the IS curve from moving to the right (ISLM model). Without the massive QE, the ARRA would be even less efficient than it already is.

Actually, dollar devaluation is a big component of being able to repay our debt. As the dollar further devaluates, so does our debt, in terms of real value at least. Obviously our debt is still much larger as a result, but your point about the devaluation of the dollar and our debt actually partially offset eachother. George Soros has gone so far as to say that the US government should intentionally devalue our dollar in order to repay our debts.

It's not as simple as that. A lot of economists would argue that the US dollar is overvalued and because of that devaluation of the dollar has multiple benefit besides lowering our debt burden.

In the mid 20th century, when the US was expanding at an exponential rate it was seen as a safe investment. Countries would pile up on US bonds and securities because they were more-or-less guaranteed compared to essentially anything else. They also filled their reserves with US currency, taking a good chunk (around a third if my memory serves me correctly) of it out of circulation, artificially driving up the value of the dollar.

Part of the reason that we are no longer an export country and import everything is because the cost of debt is lower than the cost of producing the goods here. Releasing those huge cash would devalue the dollar to its true value. That shift would increase manufacturing because the gap between the cost of debt and producing goods returns to equilibrium.

Also, China manipulates their currency to reflect changes in US currency, so our debt to them doesn't change in value.

So inflation is not directly related to money supply, because the value of a currency is not based on its "scarcity" anymore now that it's all by fiat. Money is "created" all the time by banks when they make loans or sell financial instruments - it all goes into the same M1 & M2, and the money "printed" by the federal government is just another set of debt instruments (bonds in this case) which go into that pool. Right now we're enjoying incredibly low bond rates because we're the most stable economy in the world and so our currency is in high demand as a medium of exchange.

According to the article "the American Recovery and Reinvestment Act is responsible for saving and creating 2.5 million jobs" and the ARRA cost America $840 billion. Let's tip our hat to Bill Clinton and try a little arithmetic:

$840b / 2.5m = $336k per job

That's outrageously expensive and incredibly wasteful. Where are all these jobs "saved or created" worth $336k?

FTA: "And as Mr. Grunwald shows, it made crucial investments in neglected economic sectors that are likely to pay off for decades."

Your math problem is using incomplete data. The investments made will continue to be paid back for years to come. It's not and never will be a direct correlation to the amount of jobs it created. It's even in the title of the act..."Reinvestment". Investments generally take several years to turn a profit.

do you have a comparison stat? not to say that isn't "incredibly wasteful," but if you think you can just throw a salary out there and expect it to be a fair comparison, then i feel like that could be a mistaken assumption.

there's a lot of extraneous costs that go into a person's employment that just isn't the salary

EDIT: also please remember that the private sector would never create jobs in such a downturn. it would have to come from somewhere, and in a downturn, that place is usually the government

When you see "$336k per job" the tendency is to compare that cost to the salary the job pays, which is obviously far far lower.

Instead consider the benefits of having that job over the long-term - the impact on the family, the impact on the economy in that job/company staying alive, etc. It's a one-time cost for a long-term impact.

Hey everybody, charge up those credit cards and pretend you are rich for a day. As Dickhead Cheney always said, "Deficits don't matter!" Another round of housing bubbles, covert banker bailouts, this one's on me!

Legally there has to be a sign indicating who is doing the work. The extra cost of mentioning the stimulus on the sign is minimal. Also sign makers are also part of the economy... this is a form of stimulus. Any government spending on the local economy is stimulus (i.e. we are assuming the signs weren't made in China). Fell prey to broken window fallacy

The stimulus probably created the illusion of growth in some select sectors through inflation, but most importantly the stimulus hasn't done much for unemployment, which I believe it was intended to do. Anyway, as an economist I believe it's a little dishonest to go on about how much worse things would have been without the stimulus because we'll never know, and furthermore countries that really avoided bailouts and stimulus, like Iceland, seem to be doing okay.

Republicans don't doubt stimulus will "stimulate." (Okay maybe some are stupid enough to not admit that). The thing they do not like and you guys are ignoring is inflation. When you stimulate, you introduce more money into the economy which destroys buying power, which raives prices on everything. That's a tax on us guy. It's politicaly saavy cause its not seen, therefore its politically correct.

Any way you slice it, the economy was a fucking runaway train in 2008. Headed for a depression if nothing was done. What Obama did might not have brought us back to the Clinton economic era, but it sure as hell slowed it down so someone could grab the controls.

The republican party is nothing but a bunch of butthurt valley girls mad that the fat chick is cheer captain. They don't want to fix the country---they just want your vote so they can be the popular kid again.

If you want to do anything but consume, where is this recovery? What about my savings account making 0.025%, which is WELL under the published inflation rate (which is falsified anyway, who doesn't count food and fuel costs?!?!) What about interest rates being zero and now trying to reinflate the housing bubble with more QE? No, the economy is still stagnant, the unemployment rate is still way too high, and the economy is only "good" for those who want to make money on its volatility and then take that money overseas to keep if from being taxed. This is a case of the seen vs the unseen, and the unseen consequences are much worse than the seen "results".

If this is working why don't I make a living wage? Why do all the roads where I live make me endure horrible driving conditions? Why is my state still struggling with unemployment? I think more economists should actually do some work instead of making predictions of what work is being done. I think we would have been much better off not allowing this stimulus to occur ,for which if we had driven these banks into the ground we would have had a better stepping stone in turn to make our country great again. If it is working I guess that's a good thing but I'm not sure if enough time has passed to see any relevant evidence to support these claims of it working ,nor have I seen my environment any change to make this statement true.

That sign probably cost $3000 to make. 25% of all money allocated to project ended up in union accounts. 10% of that went to campaign contributions by the unions to Barrack Obama. So, really what he did was donate to his own campaign through the American taxpayer.

Even if the facts were correct, the US dollar has been destroyed in the proces. $1800 for an ounce of gold shows how bad the economy currently is, not to mention the BDI is all biblical lows. When China doesn't want to take on more of our debt, the reality will come full view.

Well of course stimulus spending works. It just didn’t work last time because we didn’t spend enough, silly billy. If we spend more this time around, then the stimulus will work out just fine. And if it doesn’t, it’s only because we didn’t spend enough that time either. We just need to keep doing the same thing over and over again until we get a different result. I know most people consider that insanity, but we like to call it Keynesianism!

The central bank is really in control of it all. The stimulus = debtflation , pure and simple. Sure we can speculate that the entire economy might have crashed, but seriously I don't think that it was the right choice. The right choice would have been garnering public support against the banking system and turning our money back over to the people who's country's name are on it, US.

Anyone who believes this article clearly has no idea that hundreds of billions of dollars went to bail out companies and countries outside of the US that was hidden from the taxpayers funding the packages. Thanks to Anonymous, we actually saw where this money went, to the big corporations that Liberals hate and blame for our issues. If the stimulus worked, why was our credit rating downgraded twice for the first time in the history of our Nation? Why has unemployment not dropped in close to 50 months? Why are we in record debt? This is not what the American people were told the stimulus packages (there were two) would accomplish...

Don't tell anyone, but the stimulus packages were paid for by money created out of thin air which destroys the value of the dollar. Which only hurts the middle class more since their buying power is weakening.

The debate is not about whether it "worked" or not, rather, it is about whether it was effective enough to justify its cost. President Obama himself claimed that the bill would keep unemployment under 8%, and has since admitted that the jobs were "not as shovel ready as we thought". Unemployment is still stalled over 8%, and yet another round of quantitative easing was just announced.